The spooky state of the race

THE SPOOKY STATE OF THE RACE — Happy Halloween everyone! I’m dressing up as a tired reporter sick to death of this dismal, issue-free campaign. … The news that the FBI would review emails found on a laptop shared by top Hillary Clinton aide Huma Abedin and her creepy, estranged husband Anthony Weiner walloped the political world. The news hit as Donald Trump was already drawing close to Hillary Clinton in national polls. We’ve always said wild card investigatory disclosures posed the biggest threat to a solid Clinton win. Well, we got one.

Will it be enough to swing the election to Trump? Probably not. But taking the focus away from Trump certainly helps the GOP nominee and threatens to undermine Democrats’ chances for a wave that sweeps them to Senate control.

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We don’t have enough post-Comey polling to determine the national impact. And Democrats are attempting to make Comey’s unusual decision this close to Election Day the issue. This could fire up some Democratic turnout but it’s a major net negative.

Still, Trump’s path to 270 is still really, super hard. He has to win Ohio and Florida, which seems possible. But then he also has to win a bunch of other states where he trails including some combination of Pennsylvania, North Carolina, Colorado, New Hampshire and Nevada. Still a giant lift. And Clinton is competitive in Alaska, Arizona, Georgia and Utah, not what you’d call Democratic strongholds.

BRIEF MARKET MOVE — Compass Point’s Isaac Boltansky: “The letter injected uncertainty into the 2016 election and briefly roiled markets with the VIX spiking as much as ~13 percent intra-day. … We continue to believe that the electoral math heavily favors Clinton taking the White House and maintain our ~90 percent odds of her victory. In our view, the most tangible impact of this development will be felt in down-ballot races.

“The ‘Democratic Sweep’ narrative already faced long odds and we expect the most recent email development to effectively end Democratic hopes of winning back both chambers of Congress. Odds still slightly favor Democrats taking the Senate, but we believe this email scandal will ensure that the House stays under Republican control.”

ASIA STUTTERS EARLY — Reuters: “Asian stocks got off to a shaky start on Monday after a renewed FBI probe of … Clinton … The Japanese yen, seen as a safe-haven in times of uncertainty, rose slightly against the U.S. dollar. … Markets have tended to see Clinton as the candidate of the status quo, while there is greater uncertainty over what a victory for … Trump might mean for U.S. foreign policy, international trade deals or the domestic economy.

“The dollar surged 0.7 percent against the Mexican peso on Friday and extended those gains by another 0.2 percent to 18.9982 peso early on Monday. A Trump victory has been viewed as a key risk for the Mexican currency given his promises to clamp down on immigration and redraw trade relations with the country.” Read more.

THE DAILY TRUMP — Trump campaigning Sunday night said of Clinton as president : “You could have 650 million people pour in and we do nothing. Think about. That’s what could happen. You triple the size of the country in one week.” Wait. What?

TOOMEY WARNS BANKERS OF WARREN WARPATH — POLITICO’s Zachary Warmbrodt: “Sen. Pat Toomey is trying to leverage bankers' fears of Sen. Elizabeth Warren to rally support for his tough reelection fight. In a conference call with a pro-industry group Friday morning, the Pennsylvania Republican said Warren has frightened Democrats from pursuing regulatory changes that would help banks, according to a paraphrased summary of the call obtained by POLITICO.

“‘While there are individual Democrats that support traditional banks and reform, there is little to no chance of reform passing if the Democrats take control of the Senate due to Elizabeth Warren's influence on leadership,’ Friends of Traditional Banking Chairman John Boyer wrote in the email describing Toomey's comments.” Read more.

ICYMI: GDP WAS PRETTY GOOD — POLITICO’s Ben White (right before the Comey thing blew up the news cycle): “The U.S. economy grew at a nearly 3 percent pace in the third quarter of the year, a better-than-expected reading that dents … Trump’s case that growth has stalled out. The faster pace of 2.9 percent may not hold up in the final quarter of 2016 but it offers a positive headline to … Clinton less than two weeks until Election Day … Republicans, even those still supporting the GOP nominee, view 2016 as a largely lost opportunity to frame the race as a referendum on the economy …

“‘At every turn I urged him to talk about the economy and tax cuts, particularly business tax cuts, where there is virtual unanimous agreement to do something,’ said Larry Kudlow, an informal Trump economic adviser. ‘It was a tactical mistake not to and it was a strategic mistake because the economy is poor and the country believes we are on the wrong track and a lot of that is about the economy.’” Read more.

GE NEARS $30B DEAL — WSJ’s Dana Cimilluca, Dana Mattioli and David Benoit: “General Electric Co. is nearing a roughly $30 billion deal to combine its oil and gas business with Baker Hughes Inc., creating an energy powerhouse that would give GE a cost-effective way to play any recovery in the industry. GE plans to contribute its oil and gas business and some cash to the new entity, which would have publicly traded shares and be controlled by GE” Read more.

GOOD MONDAY MORNING — Eight more days until the 2016 campaign is over. Unless … No we won’t even go there. It’s gonna be over. Anyone who mentions the 269-269 electoral vote scenario gets banned. Email me on bwhite@politico.com and follow me on Twitter @morningmoneyben. Email Andrew Hanna on ahanna@politico.com and follow him on Twitter @andrewbhanna.

THANK THE LORD … The World Series will continue (sorry Indians fans but we need more baseball) after the Cubs took Game 5, 3-2. Read more.

THIS MORNING ON POLITICO PRO FINANCIAL SERVICES – Victoria Guida on Hillary Clinton's support for a Fed plan to get tough on big banks -- and to get Morning Money every day before 6 a.m. -- please contact Pro Services at (703) 341-4600 or info@politicopro.com.

DRIVING THE WEEK — Trump campaigns Monday in Michigan, a state where he trails by about seven points and will not win without some kind of miracle. He’s scheduled to be in Wisconsin on Tuesday … Clinton campaigns in Ohio on Monday, Florida on Tuesday and Arizona on Wednesday (all campaign schedules are subject to change this late in the game) … Treasury Secretary Jack Lew is in London and Oxford, England on Monday … FOMC meets Tuesday and Wednesday with no change in policy expected … Personal income and spending Monday at 8:30 a.m. expected to both rise 0.4 percent … ISM Manufacturing at 10:00 a.m. Tuesday expected to rise to 51.7 from 51.5 … ISM non-manufacturing at 10:00 a.m. Thursday expected to dip to 56.0 from 57.1 … October jobs report at 8:30 a.m. Friday expected to show a gain of 165K and 0.1 percent drop in unemployment to 4.9 percent.

NO BIG CENTRAL BANK MOVES THIS WEEK — Mohamed A. El-Erian: “The central banks of Japan, the U.K., and the U.S. will hold policy meetings this week. These three systemically important institutions are inclined to implement new policy measures, albeit different ones. Yet all three may end up keeping their policy stance as is. Their individual and collective dilemmas will illustrate the current policy funk facing the global economy, as well as the urgent need for a macroeconomic policy pivot on three continents.”

CETA SIGNED — POLITICO EU’s Christian Oliver, David M. Herszenhorn and Anca Gurzu: “The European Union and Canada signed a landmark trade deal Sunday, drawing a line under four months of political conflict across Europe that at times looked likely to scupper the pact.

“The deal is now expected to enter force on a provisional basis early next year, as long as it wins support from the European Parliament, which is seen as likely.” Read more.

HOPE FOR TTIP? — Reuters’ Robert-Jan Bartunek: “A much-debated trade deal between the European Union and the United States is not dead and negotiations will continue with the new U.S. administration after November's elections, EU Trade Commissioner Cecilia Malmstrom said on Saturday.

“‘TTIP is not dead, but TTIP is not yet an agreement,’ she told reporters after a ceremony in Brussels, in which Belgium signed its addendum to the Comprehensive Economic and Trade Agreement (CETA) with Canada. ‘The U.S. election will naturally bring the negotiations to a pause and we will resume after with the new administration,’ she added.” Read more.

OPEC TALKS FAIL — Bloomberg’s Grant Smith and Elena Mazneva: “OPEC’s internal disagreements over how to implement oil-supply cuts agreed to last month prevented a deal to secure the cooperation of other major suppliers.

“More than 18 hours of talks over two days in Vienna yielded little more than a promise that the world’s largest oil producers would keep on talking. Discussions will continue in late November, just days before the Organization of Petroleum Exporting Countries is supposed to finalize the accord that lifted oil prices to one-year highs.” Read more.

RUSSIA SLASHES SPENDING — FT’s Kathrin Hille: “Russia is preparing to slash government spending across the board over the next three years as it struggles to bring down a budget deficit swollen by lower oil prices and recession.

“The scale of the proposed austerity measures, at a time when Russia’s recession is bottoming out but incomes continue to fall, illustrate how badly the country’s public finances have been hurt by the oil price slide, which has also forced Gulf states to slash spending.” Read more.

LONDON RULES FOR UBER DRIVERS — Washington Post’s Karla Adam: “In a landmark ruling Friday that could impact Britain’s wider “gig” economy, a London employment tribunal ruled that taxi drivers using the Uber ride-hailing app are “workers” and entitled to minimum wage and holiday pay.

“Uber said Friday it would seek to appeal the judgment, which applies to the two drivers who brought the case to court. But analysts said it could also open the floodgates to claims from other Uber drivers in Britain, as well as the thousands of independent workers in Britain’s gig economy, in which temporary positions are the norm and independent workers perform short-term jobs.” Read more.

VENZEULAN SHOWDOWN — FT reports: “Venezuela’s political crisis comes to a head this week in a mass march on the Presidential Palace that raises the risk of a crackdown.

“The march, which follows opposition-led mass protests and a general strike last week, is slated to take place even as Vatican-mediated talks between the government and the opposition Democratic Unity coalition (MUD) began on Sunday.” Read more.

AMAZON PRIME COMPETES IN CHINA — Bloomberg’s Lulu Yilun Chen: “Amazon.com Inc. has started offering its Prime free-shipping service in China, ratcheting up attempts to compete with Alibaba Group Holding Ltd. for the rising number of shoppers hankering after overseas goods.

“From Friday, Chinese Prime subscribers get free shipping on orders exceeding 200 yuan ($29.50) on millions of eligible overseas goods, the company said in an e-mailed statement. Domestic goods will also be delivered free and a membership costs 388 yuan a year, lower than the U.S. fee of $99. Amazon China representative Wu Shanhan said membership won’t include access to any digital content.” Read more.

INFLATION’S BACK (A BIT) — WSJ’s Greg Ip: “After being given up for dead, inflation is gradually coming back to life. It’s not roaring back. Indeed, it’s still below the 2 percent level the Federal Reserve targets, one reason the Fed is almost certain to leave interest rates unchanged when it meets this week. But economic circumstances and attitudes of policy makers have shifted in the past year in ways that suggest the likeliest path of inflation is up, not down.

“Data released Friday showed that core inflation … reached a two-year high of 1.7 percent in the third quarter … Other data found stirrings of wage acceleration. The intellectual case for low inflation is also showing cracks. Central banks now openly entertain, and even welcome, inflation bubbling over 2 percent. This isn’t bad news. To the contrary, markets and central bankers alike will be relieved that the world is no longer skirting a deflationary abyss” Read more.

TRADE SLOWING — NYT’s Binyamin Appelbaum: “The volume of global trade was flat in the first quarter of 2016, then fell by 0.8 percent in the second quarter … The United States is no exception to the broader trend. The total value of American imports and exports fell by more than $200 billion last year. Through the first nine months of 2016, trade fell by an additional $470 billion. It is the first time since World War II that trade with other nations has declined during a period of economic growth.” Read more.

CARNEY WANTS TO STAY — FT’s Chris Giles: “Mark Carney, governor of the Bank of England, is ready to serve a full eight-year term, facing down Brexiter critics campaigning for him to resign ahead of time. Mr Carney has told friends that he is likely to make a statement on his future this week to put an end to damaging speculation.

“The governor is expected to confer with prime minister Theresa May and chancellor Philip Hammond before making a final ‘personal’ decision, potentially ahead of the publication of the BoE’s inflation report on Thursday.” Read more.

About The Author

Ben White is POLITICO Pro's chief economic correspondent and author of the “Morning Money” column covering the nexus of finance and public policy.

Prior to joining POLITICO in the fall of 2009, Mr. White served as a Wall Street reporter for the New York Times, where he shared a Society of Business Editors and Writers award for breaking news coverage of the financial crisis.

From 2005 to 2007, White was Wall Street correspondent and U.S. Banking Editor at the Financial Times.

White worked at the Washington Post for nine years before joining the FT. He served as national political researcher and research assistant to columnist David S. Broder and later as Wall Street correspondent.

White, a 1994 graduate of Kenyon College, has two sons and lives in New York City.

About The Author

Andrew Hanna is an employment and immigration reporter for POLITICO. He was previously co-author of POLITICO Pro's Europe Brief while working as an editorial fellow and was a member of the 2016 POLITICO Journalism Institute cohort. Andrew graduated from Princeton University and grew up in Watchung, N.J.